5. Efficiency in the production possibilities model Suppose France produces only two goods: wheat and digital cameras. The following graph shows France's current production possibilities frontier (also known as the production possibilities curve), along with six output combinations represented by black points (cross symbols) labeled A to F.
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- What is comparative advantage?6. Given that Nathan has 10 acres and can grow 15 bales of hay or 40 bushels of corn on anacre, while Simon has 10 acres and can grow 20 bales of hay or 35 bushels of corn per acre a. What is the maximum amount of corn and hay that they can jointly produce?b. Does Nathan have a comparative advantage in growing hay?c. Does Simon have an absolute advantage in growing hay?d. What is the opportunity cost to Nathan of one bale of hay?3. Efficiency in the production possibilities model Suppose South Africa produces only two goods: alfalfa and blu rays. The following graph shows South Africa's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. 100 80 PPF 60 40 20 D 20 40 60 80 100 ALFALFA (Millions of bushels) Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, or unattainable. Check all that apply. Point Inefficient Efficient Unattainable A B E F BLU RAYS (Milions)
- 7. Two people make up a small economy producing oats and/or shirts. The table below shows the maximum each individual can produce in one day for each good (and any linear combination). Sam Lindsay Oats 300 150 Shirts 100 75 a) Who has the comparative advantage in producing Oats? In producing shirts? b) In terms of shirts, what is the cost of producing one unit of oats for Sam? For Lindsay? c) If the total number of shirts produced is 100, then how many units of oats will be produced if production takes place according to comparative advantage?2. Comparative and absolute advantage Sam and Teresa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn Rye (Bushels per acre) (Bushels per acre) Sam 40 8 Тeresa 28 7 On the following graph, use the blue line (circle symbol) to plot Sam's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Teresa's PPF. 200 180 Sam's PPF 160 140 Teresa's PPF 120 100 80 60 40 20 100 200 300 400 500 600 700 B00 900 1000 CORN (Bushels) has an absolute advantage in the production of corn, and has an absolute advantage in the production of rye. Sam's opportunity cost of producing 1 bushel of rye is bushels of corn, whereas Teresa's opportunity cost of producing 1 bushel of rye is v opportunity cost of producing rye than Teresa, v has…Multiple Choice Jake Jane Both Jake and Jane. Neither Jake nor Jane.
- 2. Comparative and absolute advantage Larry and Megan are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn Rye (Bushels per acre) (Bushels per acre) Larry 40 8 Megan 28 7 On the following graph, use the blue line (circle symbol) to plot Larry's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Megan's PPF. (?) 200 180 160 140 120 100 80 60 40 20 0 has an absolute advantage in the production of rye. bushels of corn, whereas Megan's opportunity cost of producing 1 bushel of rye is opportunity cost of producing rye than Megan, has a comparative has a comparative advantage in the production of corn. RYE (Bushels) 0 100 200 300 400 500 600 700 800 900 1000 CORN (Bushels) has an absolute advantage in the production of…6. Efficiency in the production possibilities model Suppose Italy produces only two goods: potatoes and cars. The following graph shows Italy's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. A B с D E CARS (In millions) F 100 8 60 9 8 0 PPF <+ U 0 Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, feasible, or infeasible. Check all that apply. Point Inefficient Efficient Feasible U U L 0 xc U E 40 60 POTATOES (In millions) xo 00 000 100 Infeasible 000 ? 000 C3. Efficiency in the production possibilities model Suppose the fictional country of Katmai produces only two goods: millet and handbags. The following graph plots Katmai's current production possibilities frontier, and includes six different output combinations given by black points (plus symbols) labeled A to F. HANDBAGS (Mona) A B C D 100 E 8 F 00 18 8 PPF Point Inefficient Efficient Unattainable 0 D 0 0 D +< 0 D 20 Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, or unattainable. Check all that apply E D 60 MILLET (Millions of bushels) 00 8 OOD O x0 80 100 Ⓡ
- 3. Efficiency in the production possibilities model Suppose Germany produces only two goods: corn and tablets. The following graph shows Germany's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. A B с D E TABLETS (Millions) LL 100 F 80 60 9 20 0 + 0 PPF 0+ Point Inefficient Efficient Unattainable 20 Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, or unattainable. Check all that apply. U E U *C * 8 40 60 CORN (Millions of bushels) xx DO D 80 1005. China is able to produce turnips and potatoes in combinations represented by the following table. (Each number represents 1,000s of bushes.) Potatoes Production Turnips point a. B C D E b. C. points. 100 and 0 90 and 10 and 20 and 30 and 40 70 40 0 Plot the data on a production possibilities graph, labeling Can China produce a combination of 30 turnips and 24 potatoes? Draw this production point on the graph (label it F) and verbally explain. Demonstrate that China experiences increasing opportunity costs by calculating the opportunity cost of producing another potato at each production point. Explain.Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, attainable, or not attainable. Check all that apply. Inefficient Efficient Attainable Not attainable Point A B E F O O (O